Does CEOs’ Education Matter for Convertible Bond Issuance Decisions?

48 Pages Posted: 29 Oct 2018 Last revised: 30 Oct 2018

See all articles by Zainab Mehmood

Zainab Mehmood

University of Manchester; University of Manchester

Marie Dutordoir

University of Manchester - Manchester Business School

Amedeo De Cesari

University of Manchester - Alliance Manchester Business School - Finance & Accounting Group

Date Written: September 10, 2018

Abstract

We investigate the effect of CEOs’ education on their firms’ probability of choosing convertible debt instead of straight debt and equity. Using a security choice framework, we find that CEOs with higher levels of education have a greater likelihood of issuing convertible debt, particularly when this is beneficial to their firms. However, CEOs with MBAs are unlikely to rely on convertibles, consistent with the assumption that an MBA might impede non-standard corporate finance choices. Consistent with the upper echelon theory, we find that better educated executives are more innovative and make better corporate finance choices. The findings withstand a range of robustness tests.

Keywords: CEO education, MBA, convertible debt, security choice

JEL Classification: G14; G32; J23; M12

Suggested Citation

Mehmood, Zainab and Dutordoir, Marie and De Cesari, Amedeo, Does CEOs’ Education Matter for Convertible Bond Issuance Decisions? (September 10, 2018). Available at SSRN: https://ssrn.com/abstract=3270222 or http://dx.doi.org/10.2139/ssrn.3270222

Zainab Mehmood (Contact Author)

University of Manchester ( email )

Manchester
United Kingdom

University of Manchester ( email )

Oxford Road
Manchester, M13 9PL
United Kingdom

Marie Dutordoir

University of Manchester - Manchester Business School ( email )

Booth Street West
Manchester, M15 6PB
United Kingdom

Amedeo De Cesari

University of Manchester - Alliance Manchester Business School - Finance & Accounting Group ( email )

Crawford House
Booth Street East
Manchester, M15 6PB
United Kingdom
+44 (0) 161 2754298 (Phone)

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